Finance

IRFC IPO set to become first govt-owned NBFC to go public; takes anchor-investor route

Updated : January 13, 2021 07:23 PM IST

The issue will open for subscription on Monday, January 18 and close on Wednesday, January 20.

The first initial public offering of the year is set to open, with the Indian Railway Finance Corporation’s (IRFC) Rs 4,600 crore issue on January 18. IRFC, which is a dedicated financing arm for the Indian Railways, will also make history as the first government-owned or public sector non-banking financial company (NBFC) to go public.

The issue will open for subscription on Monday, January 18 and close on Wednesday, January 20. The initial public offering is of up to 178.20 crore shares with a face value of Rs 10 each. It will comprise of a fresh issue of 118.80 crore equity shares and an offer-for-sale of up to 59.40 crore shares. The company has set a price band of Rs 25 to Rs 26 per equity share.

At the upper end of the price band, IRFC would be able to raise Rs 4,455 crore and Rs 4,633 crore at the lower end. The company stated in its draft red herring prospectus (DRHP) that it would use the proceeds towards augmenting the company’s equity capital base to meet future capital requirements arising out of growth in business and general corporate purposes.

“Roughly Rs 1,500 crore of the money raised via IPO will go to the Government of India,” Amitabh Banerjee, Chairman and Managing Director of IRFC told reporters in a press conference ahead of the IPO opening next week.

The anchor book will open on Friday, January 15. This will be the first time that a PSU enterprise is using the anchor-investor route. “Lot of QIBs, investor communities in corporate sector, MFs, pension and insurance funds, others showed a lot of interest in the issue, so we went for anchor investors. There has not been such a large-sized issuance from a public sector entity in the recent past. So we opted for the anchor-investor route for IRFC,” Banerjee said.

Up to 50 percent of the net offer will be reserved for QIBs or qualified institutional buyers, 15 percent for NIBs or non-institutional buyers and 35 percent for retail investors.

The shares of IRFC are proposed to be listed on both BSE and NSE. SBI Capital Markets, HSBC Securities and Capital Markets (India) Private, ICICI Securities and DAM Capital Advisors are the book running lead managers to the offer.

Banerjee said that the company expects to contribute over Rs 1.10 lakh crore to the Indian Railways’ capex outlay for the current financial year. Indian Railways had an expenditure of Rs 1480.64 billion in FY20 out of which IRFC financed Rs 713.92 billion, he said.

IRFC’s assets under management stood at Rs 2.78 lakh crore as of September 2020, with a net worth of Rs 31,686 crore. The lender had no gross non-performing assets as of date, and its net interest margins or NIMs stood at 0.71 percent as of September 2020.

IRFC IPO set to become first govt-owned NBFC to go public; takes anchor-investor route

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